ISA investment platforms 2020 – 5 things to consider

POSTED ON Wednesday, 22 January, 2020

Your £20,000 a year tax-free ISA allowance should be the first investment you consider making every year. But before you choose your ISA you need to choose the platform you’re going to manage it on.

An investment platform is just the online administrative hub where your ISA investments (plus any share trading or investment funds, and a self-invested pension) can be held and managed. One place to go, one password, one tax statement.

And you can choose how much “management” you want: you can choose a DIY platform where you manage your own investing, usually with a fair amount of research support from the platform. Or you can opt for a Do it for me platform offering active investment management, ranging from advice and assistance to completely hands-free.

1 Don’t just look at the cost

Costs are important: this isn’t a decision you’re going to revisit every year.

For a modest portfolio managed on the most popular platforms, the costs can include:

  1. Annual account charges ranging from zero to £100 a year.
  2. Annual fund charges from zero to 0.45% of portfolio value.
  3. Plus charges each time you make a trade, which could be from £1 to £12.50 per transaction.

BUT… some of the more expensive platforms are rated highly by investors for ease of use and good customer support.

2 What do you want to invest in?

You don’t have to choose exactly which ISAs you want, before you choose your platform.

But not all platforms offer every kind of ISA fund. If you already know your priorities, or you may want to invest in a particular type of fund in the future, you’ll need to check that the platforms you’re considering offer those options.

  1. For some people ethical investing is their top priority: Choose ethical investments
  2. You may want to invest directly in companies (peer-to-peer, or P2P, lending) in innovative, growth industries, via an Innovative Finance ISA: Choose peer to peer lending
  3. If you’re most comfortable investing in property and want to put all your money there: Choose property ISAs

3 What kind of tools and research do they offer?

These are often the criteria that count most highly with users, so do some research and read the reviews.

Many investors are prepared to pay a bit more in fees for a platform that offers really useful apps and background research on fund performance.

4 How much are you investing?

You’ll want to look at the fee structures, and the thresholds for reduced fee charges for investors with more sizable portfolios.

For large investors, say with £50K or more in their pot, platforms that charge flat-rate fees work better.

5 The additional costs (and savings) to look out for

In addition to annual management charges…

  1. You’ll need to work out the dealing charges for the level of trading you’ll be doing
  2. Also look out for dividend reinvestment fees, transfer charges, and exit fees.
  3. Can you take advantage of the regular monthly investing discounts?

Undecided about your options?

When it comes to making investment decisions, using the services of a qualified independent investment adviser may be worth considering.

Most IFAs will offer a free no obligation initial discussion. A good adviser based on what you are looking to achieve will put together a plan for your situation. Part of this plan may be helping you to decide what investment platform is suited to your situation.

We’ve partnered with Unbiased UK who will help you find a qualified adviser in your area. Find an investment adviser »

If you’ve decided to switch platforms…

DON’T withdraw your money from your ISA, and then pay it into your new account. It all has to stay quarantined within an ISA “wrapper” to hold onto the tax advantages.

To preserve their tax-free status, instruct the platform you’ve chosen to move your funds over for you. (Get them working for their fees from Day One…)

Despite the care we take with our content, no news, feature article or comment should be seen as a personal recommendation to invest.

Before making any investment decision you should make sure that you’re familiar with the risks associated with a particular plan.

If you’re at all unsure about whether a financial product is right for you, both in terms of what kind of returns you can expect within whatever time period, and the suitability of the product for your risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. ISA transfer charges may apply, so please check with your provider.